Proceedings of the Fed discount rate meeting: 4 regional Feds supported interest rate increases

ON 26 AUGUST, THE RECORD OF THE UNITED STATES FEDERAL RESERVE ' S DISCOUNT RATE MEETING, PUBLISHED ON WEDNESDAY MORNING, SHOWED THAT FOUR OF THE 12 REGIONAL FEDS HAD VOTED IN FAVOUR OF HIGHER INTEREST RATES ON EMERGENCY LOANS TO COMMERCIAL BANKS IN THE DAYS PRECEDING THE JULY MEETING OF THE FEDERAL RESERVE. THE ABOVE-MENTIONED PROPOSAL FURTHER HIGHLIGHTED HOW CONTROVERSIAL THE DECISION WAS IN-HOUSE. THE BOARD OF DIRECTORS OF THE DALLAS, CLEVELAND AND MINNEAPOLIS RESERVES, AS WELL AS THE GOVERNING BOARD OF THE KANSAS CITY FEDERAL RESERVE, VOTED IN FAVOUR OF AN INCREASE OF 25 BASIS POINTS IN THE FIRST CREDIT RATE. THE PRESIDENTS OF THE FIRST THREE REGIONAL FEDS VOTED AGAINST THE MAINTENANCE OF INTEREST RATES AT THE JULY POLICY MEETING, AND PRESIDENT SCHMIDT OF THE KANSAS CITY FEDERAL RESERVE DID NOT VOTE THIS YEAR. THE DIRECTORS OF THE REGIONAL FEDS ARE NOT MONETARY POLICY MAKERS AND DO NOT DETERMINE THE INTEREST RATE OF THE FED, BUT THEY MEET REGULARLY WITH THE CHAIRMEN OF THE RESPECTIVE REGIONAL FEDS. THE CHAIRMAN OF THE REGIONAL FEDERAL RESERVE SAID THAT THE DIRECTORS ' VIEWS HAD HELPED TO SHAPE THEIR OWN ECONOMIC AND POLICY OUTLOOK. THE REGIONAL FED BOARDS VOTE ON THE DISCOUNT RATE AT THEIR REGULAR MEETINGS, BUT THE RATE IS ULTIMATELY SET BY THE FEDERAL RESERVE COUNCIL TO BE CONSISTENT WITH THE CEILING BETWEEN POLICY INTEREST RATE TARGET AREAS. SINCE LAST DECEMBER, THE FEDERAL RESERVE POLICY INTEREST RATE HAS REMAINED AT 3.5 TO 3.75 PER CENT。